We are pleased to bring you the November issue of The Elder Law Update, a monthly e-newsletter full of the latest legal developments and other trends of vital interest to seniors and their advocates. This month we bring you the new Medicare rates for 2008, suggestions about charitable gift annuities, news about Social Security benefits and more.

As always, we welcome your comments and questions. You may send them to Info@ElderLawAssociates.com.

New Medicare Premium, Deductible, and Coinsurance Charges for 2008

The Centers for Medicare and Medicaid Services (CMS) has announced the new Medicare premiums, deductibles, and coinsurances. The standard Medicare Part B premium is increasing by 3.1 percent to $96.40 a month, the smallest increase since 2001.

The increase is lower than previously expected in part due to the correction of an accounting error. Money for certain hospice benefits had been inadvertently drawn from the Part B trust fund rather than the fund that pays hospital costs. In addition, the lower premium assumes that physicians will take a 10 percent cut in their reimbursement rates. It is expected that Congress will act to offset some of or all of that pay cut, meaning that future-year premiums will reflect the additional expense.

Here are all the new Medicare figures:

Part B premium: $96.40/month (was $93.50)
Part B deductible: $135 (was $131)
Part A deductible: $1,024 (was $992)
Co-payment for hospital stay days 61-90: $256/day (was $248)
Co-payment for hospital stay days 91 and beyond: $512/day (was $496)
Skilled nursing facility co-payment, days 21-100: $128/day (was $124)

As directed by the 2003 Medicare law, for the first time, higher income beneficiaries will pay higher Part B premiums. Following are the higher premium rates:

Individuals with annual incomes between $82,000 and $102,000 and married couples with annual incomes between $164,000 and $204,000 in 2008 will pay a monthly premium of $122.20.
Individuals with annual incomes between $102,000 and $153,000 and married couples with annual incomes between $204,000 and $306,000 in 2008 will pay a monthly premium of $160.90.
Individuals with annual incomes between $153,000 and $205,000 and married couples with annual incomes between $306,000 and $410,000 in 2008 will pay a monthly premium of $199.70.
Individuals with annual incomes of $205,000 or more and married couples with annual incomes of $410,000 or more in 2008 will pay a monthly premium of $238.40.

Rates differ for beneficiaries who are married but file a separate tax return from their spouse:

Those with incomes between $82,000 and $123,000 will pay a monthly premium of $199.70.
Those with incomes greater than $123,000 will pay a monthly premium of $238.40.

For more information on the increases, click here.

Trial Court Decision Upheld in Guardianship Case Involving Frozen Assets

Comprehensive Personal Care Services, Inc. (CPCS) the guardian of the incapacitated ward Caridad Asensio's assets, brought an adversary action to remove Alina Ripoll, the successor guardian of Asensio. It is alleged that Ripoll improperly took money from the guardianship to purchase a home for her personal use. In an attempt to protect the ward's assets, the trial court ordered Ripoll not to mortgage, hypothecate, or encumber this home in any way. Two days later, Ripoll and her husband executed a mortgage on the home.

CPCS moved to remove Ripoll as guardian for violating the court's order. She invoked her Fifth Amendment privilege, and refused to produce any documentation or answer any questions about the mortgage. As a result, the trial court froze all of the Ripolls' assets. They instituted an appeal.

The circuit court concluded that the trial court did not abuse its discretion and affirmed the order stating that, "A circuit court has the inherent authority to monitor a guardianship and to take action it deems necessary to preserve the assets for the benefit of the beneficiaries."

Charitable Gift Annuities: Making Your Generosity Pay

Would you like to make a gift to your favorite charitable organization and receive not only a sizeable tax deduction but fixed annual payments, a portion of which will be tax free, for life as well? You can, through a charitable gift annuity.

A charitable gift annuity, or CGA, enables you to transfer cash or marketable securities to a charitable organization or foundation in exchange for an income tax deduction and the organization's promise to make fixed annual payments to you (and to a second beneficiary, if you choose) for life.

A variety of resources -cash, stocks or bonds-can be used to establish a CGA. The donor of a CGA receives an income tax deduction in the year of the gift equal to the difference between the amount paid to the charity and the value of the annuity reserved to the donor (see link to calculator below). A fixed portion of each annuity payment is tax free, calculated based on the age of the annuitant. When appreciated property is given, the donor pays capital gains tax on only part of the appreciation. If the donor is also the annuitant, the capital gains tax is spread out over many years.

Annuity payments can begin immediately or can be deferred to some future date, allowing donors to enjoy the charitable income deduction immediately and receive a guaranteed income later--for example when they retire and are in a lower tax bracket. By contrast, a child who is providing financial support for a parent may want to establish an immediate CGA for the parent. The child would receive an income-tax deduction and the parent would receive income for life.

The older the annuitants are at the time of the gift, the greater the fixed income the charitable organization will pay. The Committee on Charitable Gift Annuities sets annuity rates for all charities to follow. Although it is not mandatory that the rates be used, most charities that offer gift annuities voluntarily adhere to the rates.

Case Example: Mrs. Generous, age 82, gives $10,000 to Favorite Charity in return for a single life annuity. She will receive an annual annuity payment of $940 (figured at 9.4 percent per year). Her charitable income tax deduction will be $4,692.29 the year the gift is given, or spread over five years following. Of the $940 received each year, Mrs. Donor can exclude $639.48 as tax exempt income for 10 years. The gift is excludable from estate taxes. (Calculation is for illustration purposes only; for your actual benefits, consult your attorney or financial advisor.)

While the regulation of charitable gift annuities varies from state to state, almost all states that regulate charitable gift annuities require the maintenance of financial reserves, annual filings with the attorney general of the state, and compliance with other regulatory requirements.

Wondering what your tax deduction and annual income might be from a CGA? A company called PhilanthroTec offers a free Web-based gift calculator that runs the numbers for you. Go to: http://pcalc.ptec.com/hosts/989357365/CGA/simple.html Bear in mind that calculations vary depending on the assumptions used, the timing of the gift and the donor's unique financial situation. For your actual benefits, contact us at 1-800-ELDERLAW (353-3752) or your financial advisor.

Book Review: Don't Let the Government take Grandma's Home and Life Savings

Jim Zeigler. Don't Let the Government take Grandma's Home and Life Savings. 2007. Lulu. 198 pages.

$29.95 from Lulu ($21.95 for download version). Click on book to order.

Don't be fooled by this book's modest packaging. Written by attorney Jim Zeigler, Don't Let the Government take Grandma's Home and Life Savings is a valuable, step-by-step guide to both crisis and advance long-term care planning.

Zeigler gained fame in elder law circles after he filed a federal lawsuit challenging the constitutionality of the Deficit Reduction Act of 2005 (DRA), which placed severe restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care. That suit was ultimately unsuccessful, but this Mobile, Alabama, attorney continues to champion the rights of the elderly in other ways, most recently with this helpful book that carries a simple message: it is never too late to do long-term care planning.

The book is divided into two sections. Section one is a quick planning guide for families with a loved one already in a nursing home or about to enter one within a year or two. The second part is for families who have the luxury of time, with a loved one who is not expected to need nursing home care within the next five years.

Each section covers the various planning options, gives tips on how to lower assets to below Medicaid limits, and explains how to protect the nursing home resident's income and home while still qualifying for Medicaid. The sections conclude with a work list for each planning method. Zeigler also covers the various long-term care housing options and the benefits of reverse mortgages.

Written in a conversational tone, Don't Let the Government Take Grandma's Home and Life Savings may appear unpreposessing but it delivers a clear and concise overview of all the long-term care planning options available. In addition, purchasers of the book receive a free consultation with the vigorous advocate who is its author.

Not Paying Property Taxes Can Lead to Loss of Home

Past due notice Even if you have paid off your mortgage, you still have to keep on top of property taxes. As property taxes rise, this can be difficult, but falling behind on payments can have serious consequences. In addition to racking up penalties and fines, missing a property tax payment can cause you to lose your home.

If a homeowner doesn't pay his or her property taxes, the government will put a tax lien on the property. The government may then sell the lien to an investor who is entitled to collect the debt along with penalties and interest. If the homeowner can't or won't pay up, the investor can foreclose on the house and then sell it for a large profit. In a booming housing market, this type of investment can be very popular. Unfortunately, low-income elderly individuals are often the victims in these investment schemes. It doesn't matter how small the tax bill is; the government can get a lien on even the smallest tax bill.

Keep an eye out for property tax bills and pay them on time. If you don't remember ever receiving a property tax bill, you should check with the county to make sure you don't owe any taxes. If you can't afford to pay property taxes, many states have programs to help elderly homeowners with payments. You may be able to pay in installments or defer payments until you sell the house.

If you receive a tax lien notice or notice of foreclosure, contact an attorney immediately.

Social Security Benefits to Rise 2.3 Percent

The nation's roughly 54 million elderly and disabled Social Security recipients will get a 2.3 percent cost of living increase in payments in 2008. This is expected to raise the average monthly payment for the typical beneficiary by $24. The 2008 increase is down from the 3.3 percent bump recipients received in 2007. Nearly one-third of the nation's retirees depend on Social Security benefits for 90 percent or more of their income. (For the history of Social Security's cost-of-living adjustments, click here.)

Starting in January 2008, the average monthly Social Security payment will rise from $1,055 to $1,079 a month for individuals and from $1,722 to $1,761 for couples. This increase will apply to both the elderly and disabled Social Security recipients, and individuals who receive both disability and retirement Social Security will see increases in both types of benefits.

The Social Security cost of living adjustment also raises the maximum amount of earnings subject to Social Security taxation to $102,000.

Benefit-reduction thresholds for those who retire early also will rise. The Normal Retirement Age (NRA) is age 65 and 8 months for those born in 1941 and 65 and 10 months for those born in 1942. Although there is no limit on outside earnings beginning the month an individual attains full retirement, those who choose to begin receiving Social Security benefits before their NRA may have their benefits reduced, depending on how much other income they earn. Early beneficiaries who will reach their NRA after 2008 may now earn $13,560 a year before Social Security payments are reduced by $1 for every $2 earned above the limit. Those early beneficiaries who will attain their NRA in 2008 will have their benefits reduced $1 for every $3 earned if their income exceeds $36,120 in the months prior to the month they reach their NRA.

For 2008, the monthly federal Supplemental Security Income (SSI) payment standard for an individual will be $637, and $956 for a couple.

For a complete list of the 2008 Social Security changes, go to: http://ssa.gov/pressoffice/factsheets/colafacts2008.htm

For more ElderLawAnswers information on Social Security, click here.

For the official announcement from the SSA, go to:http://ssa.gov/pressoffice/pr/2008cola-pr.htm

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Elder Law Associates PA is a boutique elder law firm that practices exclusively in Medicaidand long term care planning including long term care insurance, Medicaid applications, home and community-based Medicaid waiver services, diversion program benefits, nursing home benefits, spousal refusal applications, and Medicaid fair hearings and appeals; nursing home and assisted living facility residents' rights litigation; asset preservation planning with a special focus on planning in light of the Deficit Reduction Act of 2005, including personal service agreements, the purchase of life estates, income producing real estate and spenddown planning; disability planning, including special needs trusts and guardianship; estate planning, including wills and trusts and advance directives; and probate, which encompasses estate and trust administration as well as specialized litigation.

We assist clients in planning for the possibility of disability, incapacity, home health care, assisted living and/or nursing home placement. Our firm enables clients to avoid impoverishment caused by the escalating cost of long term care, to maintain their right to make health care decisions and to avoid unnecessary medical treatment.

We hope you have enjoyed The Elder Law Update. If you have questions about something you read, elder law matters or issues concerning persons with disabilities, we would be delighted to hear from you. We serve as an elder law resource to many professionals and organizations and want to become your elder law resource as well. You can reach us at Info@ElderLawAssociates.com.

Warm regards,

Ellen S. Morris, Esq. & Howard S. Krooks, Esq., CELA

Elder Law Associates PA

email: info@elderlawassociates.com

phone: (561) 750-3850 / (800) 353-3752

fax: (561) 750-4069

web: http://www.ElderLawAssociates.com

This publication is intended for general information purposes only. It is not intended to constitute individual legal advice to any specific client.